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251Ch4lecture6 - Cross-Price Elasticity Chapter 4...

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9/6/2011 1 1 Chapter 4: Elasticity Lecture 6: Other elasticities Cross-Price Elasticity Cross-price elasticity = Substitutes in consumption (> 0) Complements in consumption (< 0) Cross-Price Elasticity example P tents $40 →$42 Q sleeping bags 10 → 9 % 1 41 41 0 % 2 19 / 2 19 d d sleepingbags sleepingbags tents d tents tents sleepingbags Q Q avgP P P avgQ Income Elasticity Income Elasticity = Positive → normal good Negative → inferior good Price Elasticity of Supply
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